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Government Technology | Volume 9.2
DIGITAL BRITAIN
NEXT GENERATION BROADBAND David Holt, CEO of Digital Region Ltd, discusses the project which put South Yorkshire right at the centre of digital Britain DIGITAL REGION LTD IS WHOLLY owned by the Regional Development Agency, Yorkshire Forward, and the four local authorities of South Yorkshire – Barnsley, Doncaster, Rotherham and Sheffield. Together these stakeholders represent approximately 1.3m residents and almost 40,000 SME businesses. The Digital Region project was initiated in June 2005, following analysis and initial business planning led by the Yorkshire & Humber Adit. Regional Adits had been set up in 2003 by the OGC (HM Treasury Office of Government Commerce) and DTI (HM Dept. Trade & Industry), as a joint Broadband Task Force to address the government’s stated objective of the UK having the most extensive and competitive broadband market in the G7 by 2005. This developed into the DTI’s Broadband Aggregation Programme (BAP), with specific ADIT objectives to: • Maximise broadband deployment • Maximise value for money in broadband procurement • Offer consultancy services to public sector (Broadband matters). The approach taken at that time, remains largely intact today – the aggregation of public spend on telecoms, and particularly broadband related services. The partners developed a clear vision that could set them ahead of the UK’s digital strategy, based on two overriding principles: • The likelihood of significant and sustained growth of use in broadband applications • The increased purchasing power of aggregating spend. FINDING THE NEXT INDUSTRY This analysis and early planning was being carried out in South Yorkshire at a time when its main industries, manufacturing and mining, were disappearing. There was an urgent requirement to find the next industry for the region – one that brought efficiency, made good use of limited public funds, was sustainable and would create jobs and inward investment. This vision required a new ‘state of the art’ digital infrastructure, a network accessible by all, something that would attract and excite the digital industry, as the core enabler. History showed that the broadband market in the UK came to small parts of South Yorkshire initially, at a time when other regions and leading cities such as London, Birmingham, Manchester, Leeds, Cardiff, and Glasgow were being well catered for. It was expected to be some five to seven years after these cities were fully covered with first generation broadband that South Yorkshire had almost full coverage.
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THE BUSINESS MAGAZINE FOR GOVERNMENT TECHNOLOGY
In tomorrow’s world, when the analysis was pointing towards a digital economy, South Yorkshire could not wait for the market to catch up, they could not let the rest of the UK and large parts of Europe be so far ahead, at such a critical time. GETTING STARTED The project was initiated in June 2005, with the setting up of a project team, including technical, commercial, procurement, legal, financial, communications, marketing, regulatory and stakeholder management roles. There were four main thrusts of the project from the outset: procurement; state aid approval; business model development, including fundraising; and stakeholder engagement. The procurement was initiated in September 2005, with 70 organisations responding to the ‘Pre-Qualification Questionnaire’ (PQQ). The level of interest shown confirmed our belief in such a far reaching initiative. 17 of those organisations passed through the PQQ stage and were soon shortlisted to six, and then to three who would continue on and develop full scale bids. The three were Thales (Thales Security & Solutions Ltd), BT, and Easynet (Sky). The project team also made a key decision to embark on an early application to the EU Commission for State Aid approval. Again, this proactive decision to complete this aspect in parallel with other key activities proved challenging but brought its own rewards. Not only did Brussels provide much enthusiasm and support for the project, the sharing of information helped Digital Region guide its procurement, and also, we suspect, helped the Commission in their ongoing policy development. After a lengthy period of engagement, including meetings, workshops and document drafting before the final decision process, approval was granted in November 2006. As well as the support this had provided to our procurement process, the approval gave much comfort to the bidders that this really was going to happen. FINANCES Development of the business model had two main themes – a thorough understanding of the costs involved and gaining commitment to funds. The majority of the cost information was developed through the bid process, which also included an independent analysis of market demand. Together, with the inclusion of internal costings, a comprehensive
David Holt
business model was developed, enabling a clear understanding of the funding requirement and the financial risk involved. The main costs of the network are around the actual deployment – the digging of trenches for approximately 700km of new ducting and fibre, equipment deployment at four core nodes and 54 telephone exchanges and installation of almost 1,600 new street cabinets – a total outlay of £96m. The running and management of the network requires substantial systems and resource to enable an efficient 24 hour operation. Digital Region Ltd has a relatively small team to manage the contractual relationships and provide support in generation of demand. A core element of fundraising was South Yorkshires Objective One status, and its ERDF (European Regional Development Fund) provision. Digital Region being a key theme of the Regional Economic Strategy (RES), it was always considered a core element of the ERDF programme. Gaining access to the ERDF funds was through two phases – agreement of the ERDF programme for the region, between Yorkshire Forward and the EU Commission, followed by Digital Regions application as a major project for a significant part of Yorkshire & Humbers allocation. The Commissions work to agree the ERDF programme with its member states took longer than they anticipated leaving the Digital Region project more advanced than its core funding source. The application for major project funding, within the ERDF programme, also brought its own challenges. The new ERDF programme still required agreement on many of the details, and each agreement requiring all member states approval. The outcome from each of the steps required here was then folded into the procurement bid process and the contractual negotiations with Thales, the selected partner. This elapsed time, as ERDF approval was sought, allowed further stakeholder